Watch a recently rediscovered Steve Jobs lecture where he talks about leaving Apple and what he’s learned about management

The Apple founder had been kicked out of the company and had been building his new computer company, NeXT. (Apple bought it in 1996, bringing Jobs back.)

That’s the context in which Jobs gave a wide-ranging lecture to MIT MBA students in the spring of 1992, set up by one of Laurene Powell’s siblings.

The man who would end up spearheading the development of the iPhone ended up talking for over an hour and taking questions about several topics he didn’t address later in his career, including his management style, his closest competitors, and how he felt when he left Apple.

On the Macintosh’s killer app and how he didn’t see it coming (10:30):

“We never anticipated desktop publishing when we created the Mac. Sounds funny because that turned out to be the Mac’s compelling advantage, the thing it did, not 1.5 or 2 times better than everything else, but 4, 5 times better than anything else, where you had to had one.”

“We anticipated bitmap displays and laser printers but we never thought about Pagemaker, that whole industry really coming down on the desktop. Maybe we weren’t smart enough. But we were smart enough to see it happen 9-12 months later. And we changed our entire marketing and business strategy to focus on desktop publishing, and it became the Trojan Horse that finally got the Mac into corporate America.”

On why hardware is a hard business (13:15):

“The greatest thing is hardware churns every 18 months. It’s pretty impossible to get a sustainable competitive advantage from hardware. If you’re lucky, you can make something 1.5, 2 times better than your competitor, which probably isn’t enough to be quite a competitive advantage. And it only lasts for 6 months.”

“But software seems to take a lot longer for people to catch up with. I watched Microsoft take 8 or 9 years to catch up with the Mac, and it’s even arguable they’ve even caught up.”

On consultants (15:28):

“A mind is too important to waste.

…

The only consultants I’ve seen that I think are truly useful are the ones that help us sell our computers. Seriously, I don’t think there’s anything inherently evil in consulting.

I think that without owning something over an extended period of time, like a few years, where someone has a chance to take responsibility for one’s recommendations, where one has to see one’s recommendations through all action stages and accumulate some scar tissue for the mistakes and pick one’s self up off the ground and dust one’s self off, one learns a fraction of what one can.

…

It’s like a picture of a banana. You might get a very accurate picture, but it’s only 2-dimensional.”

On leaving Apple (33:00):

“I’ve obviously thought about this a lot. And I don’t want to get into it too much. I will say that I think everybody lost. I think I lost, and I wanted to spend my life there. I think Apple lost. I think customers lost. And having said all that, so what? You go on. It’s not as bad as a lot of things. It’s not as bad as losing your arm.

People go on, and companies go on. I’m very happy every time Apple ships a Mac. I think the PowerBooks are decent products. I like them.

But Apple has been struggling the last few years. They’ve been having a real struggle with who they want to be. And this is nothing new. We always had that. That’s part of what kept Apple alive, I think.

There were two camps within Apple. Camp 1 wanted to be the next serious computer company, and camp 2 wanted to sort of be the Sony of computers.

And that struggling I think was somewhat tearing Apple apart. And fortunately, the Sony guys have won. They’ve kind of decided to go be the Sony of computers. So the PowerBooks are pretty good, but the Quadras suck wind right now, the high end stuff. And they’re basically not putting a lot of resources onto the power users on desktops, and they’ve put most of their best people now on the portables and on consumer products that they’re going to be coming out with.

And I think they’ll do very well at that.”

On what he learned about management at Apple (51:45):

“I now take a longer-term view on people. In other words, when I see something not being done right, my first reaction isn’t to go fix it. It’s to say, we’re building a team here, and we’re going to do great stuff for the next decade, not just the next year.

What do I need to do to help, so the person that’s screwing up learns, versus how do I fix the problem?

That’s painful sometimes. I still have the first instinct to go fix the problem. But that’s taking a longer-term view on people, is probably the biggest thing that’s changed.

…

Sooner or later, you’re paying someone to do what they think is right, but then you’re trying to get them to do what they don’t think is right. And sooner or later it outs, and you end up having that conflict.

I’ve always felt the best way is to get everyone in a room and talk it through until you agree.”

On building the Mac factory (58:30):

[Are you sending your manufacturing overseas?]

“I heard that rumor too, no, it couldn’t be further from the truth. We love manufacturing at NeXT. When I was at Apple I had the good fortune to lead the effort to build the Mac factory.

We designed, and built, and operated that factory. And it was a real breakthrough. It was the best factory in the industry until we built the one at NeXT.

We made a lot of mistakes, though. As an example, I remember walking through it, one of the things you learn when you start building factories is that warehouses are really bad, right? Warehouses are bad, because you tend to put things in them. And inventory is really bad.

Inventory is really bad, because if it’s defective, you don’t find out about it for a while. And you don’t close the quality feedback loop with the vendor, and correct the problem, until they’ve made a zillion of them.

What you want to do is find the problem, the first one that comes in the door, and stop them from making more until you fix the problem.

Warehouses also cost money, because you put all this stuff in them. And the stuff, you have to go borrow money from the bank, or use money that could be used in a more productive purpose, so warehouses are bad.

And you want to go to [just-in-time.] I’m sure you’ve studied this all, and studied examples.

I was walking through the Mac factory one day, and the two biggest pieces of automation we put in were a giant small-part storage and retrieval system. It was these totes that ran around.

And the second one was this giant burn-in system at the end. A few tens of millions of dollars worth of equipment. And I realized, unfortunately too late, that both of them are warehouses.

They’re just high-tech warehouses.

So when we looked at NeXT, we said no warehouses of any kind. We have a true JIT factory. Stuff comes in, and is delivered right to the point of use on the factory floor. There is no warehouse. Deliveries are made daily, sometimes more frequently than that.”